(NEW YORK CITY) - The New York City Comptroller’s Bureau of Labor Law has filed a lawsuit against BLDG 44 Developers LLC (BLDG 44), a leading residential developer, for violating the Minimum Average Hourly Wage that should have been paid to its Construction Workers pursuant to New York State’s 421-a.

The lawsuit, filed at the New York City Office of Administrative Trials and Hearings, alleges the development company owes $40 million in back wages and penalties. 

An investigation by the Bureau of Labor Law found that BLDG 44, which is receiving the 35-year 421-a tax exemption, fell significantly short with a Minimum Average Hourly Wage of only $31.88, totaling $32,285,200.48 in underpayment.

The Bureau’s lawsuit alleges that BLDG 44 failed to meet the Minimum Average Hourly Wage requirement for the period of construction that took place between June 5th, 2015 and August 15th, 2019.  

Because the pay gap exceeded 15% of the required wage, the Bureau of Labor Law imposed a 25% penalty as required by law, amounting to an additional $8,071,300.12, designated for the New York City Department of Housing Preservation and Development (HPD) specifically for affordable housing initiatives.

The total underpayment sought, including the penalty, totals $40,356,500.60. 

When opting into the 2017 version of 421-a, the program mandates that developers of properties containing at least 300 dwelling units guarantee a minimum average hourly wage of $60 for Construction Workers in Manhattan south of 96th Street or $45 in Brooklyn or Queens.

Unlike the Minimum Wage or The Prevailing Wage, the minimum average hourly wage is not a specific rate that must be paid to each Worker, but instead is calculated by taking the average of the total compensation of all construction workers on a project divided by the total hours worked by those workers. 

In exchange for complying with the wage requirement and certain rental affordability requirements, the developer can receive a generous 35-year tax exemption equal to 100% of the increases in assessed valuation for developments.

The law requires developers who apply for the tax exemption to appoint an independent monitor and submit a project-wide certified payroll report within one year of project completion to the Comptroller’s Bureau of Labor Law for review and approval.

The New York City Office of Administrative Trials and Hearings will preside over the matter. 

To Read This Labor News Story In Its Entirety, Go To: NYC Comptroller Files Lawsuit Against Leading Residential Developer Seeking Over $40 Million in Wage Violations : Office of the New York City Comptroller Brad Lander